Tuesday, April 30, 2013

The alphabet of 2014

With the 2014 general elections looming large, the BJP has managed to quell an attempted revolt in the party ranks. But the collateral damage could have far-reaching repercussions

Let’s say she is a brilliant young political writer who thinks alliterations, symbols, analogies, synonyms, antonyms and metaphors are passé when it comes to analysing the far-in the-horizon Lok Sabha elections of 2014. What choice does she have? Let us say she decides to use English alphabets to forecast who would be the next PM in 2014. Let us hope that, unlike many political journalists today, she knows her alphabets.

She would have a tough time choosing between N and M. And she would, of course, know that there is another N that looms like a mythological warrior. She won’t be able to guess – despite her best efforts and lots of advice from television anchors – as to how another M would behave. People in WB have figured out that this M sometimes herself doesn’t know how she will act. She does know that another N who represents a state called O will not bother if M or N wins the race as long as he remains THE N in his state. And let us spare her and you the agony of other alphabets like J of TN, O of J&K, Y of AP and the original M of UP.

Confused? Actually, so are we. We – like you – know that voters like us are so mad at this so-called government being run by the UPA that we would love to vote against it in 2014. But which alphabet or set of alphabets do we vote for? The logical choice would be NDA, but the possible candidature of an N called Modi has already generated so many abusive and counter-abusive ‘expert opinions’ that we will let this N be; at least for now. That brings us back to that other N and that other M. If not Modi, N can only mean Nitish Kumar, CM of Bihar and the only true ‘secular warrior’ within the NDA fold. And if not Mamata/Mayawati, the M can only mean Mulayam Singh Yadav, the survivor who can teach a lesson or two to another cow belt chieftain called Lalu Yadav. There is a reason why M and N (Mulayam Singh & Nitish Kumar) have already started plotting their moves. Ask any Indian with even a little bit of common sense and it is doubtful if either would be their first choice as PM. But both M and N – like the one and only one heir apparent R – have history on their side. Our political journalist asks you with a wimpish smile – cross your hearts and admit it if you are old enough to remember. Did you, in your wildest dreams or never-ending nightmares, vote in 1996 for a prime minister called HDDG (software geeks, that is not hard drive... it is His Excellency HD Deve Gowda)? Even more bizarre, Indians actually did not vote for a do-gooder with a strange set of alphabets IKG. Our lady reporter was confused when she was told that IKG stands for a great pacifist called Inder Kumar Gujral, who was willing to sell India down the tube for the sake of peace with Pakistan. Did we hear Balle Balle? She was confused because sycophants who write about Congress told her that they had just played an alphabetic trick. First, they yanked the alphabet K from IKG and arrived at IG. They had to remove K because of someone called Sitaram “Kesari”. Then they realised that IG had long passed away. About a few million sycophants started looking for a simple replacement for I. They wanted something simple, which even political journalists could understand. So they settled on S and IG was replaced by SG. Of course, we must apologise on behalf of the lady reporter who appears a little overwhelmed with all these alphabets. We told her that SG has anointed another M. She promptly came back with some alphabets and epithets till we told her that this M is special because he is the only leader in the history of the world who leads without any ability or willingness to lead. Our reporter was thrilled and announced she is taking her poodle for a walk.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
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Saturday, April 27, 2013

Revisiting IT - beyond the street

Results of top Indian IT companies, with the exception of TCS, have sent shock waves across markets. But rather than worry about them, Indian IT companies must focus on structural reforms for long term advantage

There is a paradoxical advantage that Indian IT firms enjoy in the current situation due to their reliance on overseas (especially developed) markets rather than the domestic economy. They have been through one major crisis in 2008, when most of the domestic demand-dependent India Inc. was rejoicing in our economy’s prized ‘fundamentals’. This time, when the crisis shifts to the EU, one can expect that they are better prepared.

Did they manage to take advantage of precedent? Or have they wasted a good crisis, as the saying goes? Let us first look into the final results of the three IT companies that are a part of the B&E Power 100. TCS, of course, is a clear winner with revenues of $10.17 billion (growth of 24% yoy) and net profits of $2.2 billion (growth of 16% yoy); which places it at 4 in the B&E Power 100 list compared to 7 last year. Infosys reported slower growth with revenues at $6.99 billion (a growth of 15.77% % yoy) and profits at $1.72 billion (a growth of 12.64% yoy; ranked 6 in the B&E Power 100 compared to 11 last year). Wipro’s results were even more modest, as it posted revenues of $5.92 billion (a growth of 13.4% yoy) and net profit of $1.1 billion (a growth of 5% yoy, rank dropped to 18 in the B&E Power 100 from 17 last year).

The real investor challenge these players face is the burden of expectations. Infosys, in particular, is facing the brunt, since its Q4 results showed revenues of $1.77 billion (yoy growth of 10.5%) and a decline of 2% qoq. Furthermore, it gave a very modest guidance of 8-10% revenue growth for the current fiscal, which would underperform


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
 
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Wednesday, April 24, 2013

‘Heins’ian economics at work...

Ever since moving into the corner office of the Waterloo based smartphone maker, Thorsten Heins has been struggling to undo the damage RIM suffered over the past few years. However, his two pronged strategy of consolidating the enterprise segment and leveraging emerging economies will take time to deliver results

It often happens that the ascent of most CEOs to the top is marked by public scrutiny, appreciation and sometimes outburst. However, Thorsten Heins, President & CEO, Research In Motion (RIM) has had a relatively subtle career as far as his media presence is concerned. When he was promoted to the top job in January 2012, analysts pointed out that “he’s not a well-known quantity.” A masters in science and physics from the University of Hannover in Germany, Heins started his career in 1984 straight out of college with Siemens AG where he was chief executive of various divisions including R&D, customer service, sales and product management. His last stint at the Munich-based multinational was that of Chief Technology Officer (CTO) before RIM recruited him as Senior Vice President of the handheld business unit in 2007. He quickly rose through the ranks and was made the Chief Operating Officer of Product and Sales in July 2011.

But ever since moving into the corner office of the Waterloo-based smartphone maker, Heins has undertaken an extensive strategic review of the business. And what he’s probably realised by now is that he has an awful lot on his plate. A case in point is RIM’s dwindling financial performance. From a high of $145 in 2008, RIM’s stock has tumbled down to $14 (a 90% fall). In 2011 alone, the stock lost around 80% of its value. What’s more – as per statistics compiled by IDC, BlackBerry devices held just 8.2% share of the global smartphone market at the end of Q4 2012 compared to 14% during the same quarter last year. In fact, despite the launch of multiple new BlackBerry 7 smartphone models, RIM’s revenue for Q4 2012 was $4.2 billion, down 19% from $5.2 billion in the previous quarter and down 25% from $5.6 billion in the same quarter of 2011.

Their problems are evident. Behind this heartbreaking free fall lies a blunder by RIM’s cofounders who despite launching great products failed to predict how the smartphone market would pan out in times to come. A look at RIM’s revenue pie makes it clear that the company’s business is divided into two major segments – enterprise solution and devices (smartphones and tablets). The enterprise segment makes up for 22% of the company’s revenue. The rest comes from smartphones and tablets. Given that RIM’s USP was its network infrastructure which made its enterprise solutions so lucrative to corporations, the company continued developing the kind of phones that would appeal to these clients. However, what they didn’t realise (or probably did but preferred to ignore) was that the sudden surge in sales of BlackBerry smartphones was not caused by companies signing up but because the mass market had started purchasing them. These were the consumers who were not looking for security but for appealing devices. The strategy worked well initially as there were hardly any smartphones in the market except RIM’s. But as soon as Apple’s iPhone and Google’s Android operating system were launched in 2007, RIM’s devices started losing sheen. And before the company could realise what had happened, sales went for a toss.

The promoters who made these assumptions have left the company. And fortunately, Heins knows what went wrong. Therefore he now plans to bring back the company’s focus on the enterprise segment. During his first conference call, as CEO, with analysts last month, Heins said, “We believe BlackBerry cannot succeed if we try to be everybody’s darling and all things to all people.” At the end of 2011, over 90% of Fortune 500 companies had deployed the BlackBerry solution, with approximately 80% of these having an installed base of 500 or more devices. In concurrence with this strategy, RIM recently released the BlackBerry Mobile Fusion – an expanded version of its server software which will now support phones made by competitors as well. In an exclusive conversation with B&E, Michael Holt, a Senior Stock Analyst with Morningstar, expresses his confidence on RIM’s hold on the enterprise segment. “The BlackBerry is still the gold standard in certain corporate markets where premium security is valued. We expect it to retain that position for some time,” says Holt. So, is this a bad strategy? Depends on how you look at it. While on one hand this might indicate further shrinkage of BlackBerry devices in offices, but on the other it gives RIM an opportunity to pursue smartphones as an independent business.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
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Friday, April 19, 2013

“The opportunities for sustainability are immense”

Prof. Anant K. Sundaram, Faculty of Business Administration at the Tuck School of Business works with Senior Managers of companies on how their financial fundamentals and performance metrics drive market values and P/E ratios. In an exclusive conversation with B&E’s Amir Moin, Prof. Sundaram discusses the issue of sustainability and how companies can effectively implement it.

We live in a world that is undergoing rapid transition. For now, our setbacks are more or less financial and economic in nature. But as we further globalise amidst an explosion in population, the world that we know of will find itself encountering a completely different set of problems. It is therefore imperative that corporations around the world take up the issue of sustainability with urgency. In this exclusive conversation, Anant K. Sundaram, Professor of Business Administration at the Tuck School of Business, tells B&E, how companies should perceive sustainability and what they can do do make it an integral part of their business model.

B&E: Sustainability is something which a lot of companies promote now a days. While some are actually pursuing strategies that make sustainability a reality not just in terms of application but also profitability, others use it as a mask to look good. What is your view of sustainability and how is it helping the company’s bottom line?

Anant Sundaram (AS): Step back for a moment and think about what ‘sustainability’ means, since it is misused a lot. In a literal sense, it means ‘making something live forever.’ This, of course, is plainly impossible to do and hence not a terribly useful definition. The definition used in policy and NGO circles goes something like ‘meeting society’s needs today without compromising the needs of future generations.’ This, in turn, is a highly loaded definition: Who is to judge what anyone’s needs are? How can we know what future generations might need relative to today’s? The bottom line is, these traditional definitions of sustainability have a condescending, and frankly, impractical view about the world as it is and what people’s wants are. Corporations live in a practical world. They manage scarce resources and juggle the conflicting needs and imperatives of multiple constituencies, all with a view to create value. From their point of view, sustainability is fundamentally about meeting people’s wants for goods and services by consuming as limited a set of resources as possible, keeping their footprint associated with the side effects of such use minimal.

This means efficiently using air, water, minerals, metals, fossil fuels, and other natural (including biodiversity) resources, in a manner that mitigates – or even zeroes out – the footprint associated with pollution, waste, and emissions. Hundreds of good companies – whether it’s a Walmart trying to drive efficiencies in its supply chain, an Apple in its product design that emphasizes conservation, or an Infosys in its building and data center processes that obsesses over energy efficiency – adopt this view. Surely, there are some that will try to use it “as a mask” to look good. However, those will be short-lived efforts, perhaps even short-lived companies. At the end of the day, the ones that do not see the links between sustainability and efficiency will leave value-creation opportunities on the table, thereby not being able to compete against their more efficient peers. In the process, they will be the first to fall by the wayside.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
 
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“I’m not going away anytime soon”

When 2007 began, Ford Motor Company was in one of the worst shapes amongst automakers. Then Alan Mulally walked in, conceptualised his ‘One-Ford’ strategy and even today, is working hard to implement his masterplan to earn maximum dollars in fast-growth markets. mulally in a conversation with B&E’s Pawan Chabra

After working at Boeing for over 26 years, Alan Roger Mulally took charge as the President and CEO of Ford Motor Company in September 2006. While he wasn’t the first choice for the top job at the auto major, under him the company managed a remarkable turnaround. Today, with less than two years left at the automaker, all eyes are on Mulally’s ‘One Ford’ strategy, and what more he can achieve with his plan in the days to come, especially in fast-growth markets. In an exclusive interview with B&E, Mulally shares his thoughts on the road ahead of Ford in India and his retirement & new launch plans.

B&E: You have unveiled the EcoSport in India, making it the second product to be launched in India under the ‘One Ford’ strategy. When can Indian consumers expect to buy it and what expectations do you have from the product?
Alan Mulally (AM): We chose India for the global premiere of the EcoSport, our compact SUV, because this market is very important for Ford Motor Company. We believe that it will become one of the three largest automobile markets across the globe by the end of this decade. The EcoSport will be sold in the Indian market during the later half of 2012 and it will also be exported to 30 different markets worldwide from India. To start with, it will be produced in India and Brazil. In total, the EcoSport will be sold in over 100 markets and it will be powered by the Ford’s revolutionary 1-litre ecoboost petrol engine. It will be available in both the petrol and diesel variants. We believe it will create a new segment in India as it has the flexibility of an SUV with the fuel efficiency that the modern consumer is looking for. Obviously, it marks the start of the implementation of our SUV plan for the Indian market.

B&E: The ‘One Ford’ strategy has been key to the turnaround tale of Ford Motor Company. Does the plan only help you cut costs by delivering economies of scale or is there much more to it?
AM: ‘One Ford’ is all about making one product for all the markets that we operate in. For instance, a Fiesta sold in Chennai will be made exactly the same way as the one that is sold in the US market. This strategy not only helps us gain economies of scale on the end of the suppliers, but also empowers us to bring more affordable products to the market. This is a very important strategy for Ford as the consumer today is looking for vehicles that are best in safety, quality and fuel efficiency at an affordable price. Roughly, today by using the One-Ford plan, what we have achieved is that over 60-80% of our global platforms are the same for producing vehicles across markets. As far as launches are concerned, under the One-Ford plan, we started with the Figo in 2010 and including the Figo and the EcoSport, we plan to launch eight new models in India by 2015.

B&E: The US auto market has almost recovered from what we saw during the days of recession, But EU is still a big concern. On the other hand, almost all automakers are bullish on the future of India and China. How will the coming years turn out for the auto industry?
AM: Europe is still a concern, but the governments there are making constant efforts to improve the situation. As a company, we expect the global automotive sales to increase by 5% a year at least for the next two years. The driver to this growth will be the Asia-Pacific region and mainly markets like India and China. At the end of 2010, close to 74 million vehicles were sold across the globe. It is expected that this number will go up to 100 million vehicles by the end of 2015. As far as India is concerned, it is one of the most important markets for Ford. The consumer is terrific. He is looking for value and fun to drive vehicles.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
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Monday, April 15, 2013

“There is a clear need for consolidation”

B&E: Indian telecommunications industry may start consolidating by the middle of 2012 after the much-awaited National Telecom Policy, 2011, is unveiled in January 2012. How will this help the industry going forward?

Ranjan Mathews (RM): There are currently 12 operators or more in most of the 22 circles in the country. This has led to a situation of hyper-competition, fierce pricing battles, plunging profit margins, spectrum scarcity and oversupply. In fact, this situation has arisen as a result of the induction of five new operators in 2008 (the context of much of the 2G Scam) by the Department of Telecommunications (DoT). Further, between 2001 and 2007, there were many mergers and acquisitions (M&As) as older operators either exited the business or acquired other operators to cobble together a pan-India footprint. Significant of these were Bharti, Idea, Vodafone and TATA. Major operators who exited the business were BPL, Max Hutchinson, AT&T, Telstra, etc. Most experts now agree the market is ripe for another round of M&As to prune the market to a more sustainable six operators. This conforms to what is seen in most other international markets where there are no more than 3-5 operators. This is seen as more than sufficient to provide adequate competition in the market place. Thus, the benefits that will accrue as a result of such consolidation are many. One, we will have a healthier industry with adequate financial resources to invest in the technology advances (advanced networks, applications, etc) which are needed to keep the Indian mobile communications industry at the forefront of global advances. Second, one can expect affordable services for the customers. Expanded employment opportunities, reduction in the digital divide, increased rural penetration, more efficient use of scare spectrum, increased availability of loans and equity funding for needed roll-out of telecommunications infrastructure are some of the other benefits that one can expect from consolidation. Further, it will have a positive cascading effect on GDP as it has been established that a 10% rise in broadband penetration leads to a 1.3% increase in GDP.

B&E: But don’t you think it’s too late, in terms of safeguarding the industry?

RM: The initial flaw was that DoT ignored TRAI’s recommendation to not issue licenses in 2008 without ensuring there was adequate spectrum available. Further, due to the ensuing litigation surrounding the grant of licences, M&A activity could not proceed until the court cases are resolved. Once this happens, the new M&A recommendations made by TRAI will certainly help in facilitating M&A activity. However, another significant factor that will impact M&A activity will be the availability of additional spectrum, spectrum pricing and licence renewal terms for older operators that will see their licences coming up for renewal commencing 2014.

B&E: New players like Loop Telecom, which have invested thousands of crores in buying the spectrum licences, are now requesting the government for an exit. What, according to you, went wrong?

RM: The fundamental problem was that there were too many players in each licensed area. Contrary to all international norms, the number of operators went to 12. This caused a brutal price war as the new operators fought for market share. However, this only caused a downward spiral for all operators causing a serious decline in profitability. The scarcity of spectrum for the new operators led to many regulatory complaints and litigation. Finally, the eruption of the 2G Scam caused both international and domestic funding to freeze. This caused a liquidity crisis for the new operators who could not raise the required funds for network roll out and market expansion. The litigation also put the license of many of the new operators at risk which further exacerbated their business viability.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
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“For Avon as a corporation, a sell-out is out of the question!”

With a presence in over 140 countries, the Fortune 500 Avon Products Inc., is the largest direct-selling company in the world. And India is considered a critical market by the company. Hemant Singh, MD, Avon India, explains to B&E’s Steven Philip Warner how Avon fanatically believes in reaching out to the masses with the right investments in R&D and how, the company for now, is all about ‘Organic’ growth.

For the first twenty-seven years of his career, Hemant Singh worked at HUL, PepsiCo and Modicare (he was the CEO of Modicare, when he left the company). 2009 saw him being welcome aboard the $10.86 billion-a-year revenue-earning (FY2010) company – Avon Products Ltd., as its Executive Director (Business Development) for the APAC region. Today, he serves as the MD of Avon India. In an exclusive interview with B&E, this man who runs the show at a company which prides itself for being “The Company for Women,” reveals some geographical market-specific trade secrets.

B&E: India as a market contributes to less than 5% of Avon’s global sales. How important really is India for the largest direct selling company in the world?
HS: There is a reason for it. The company was started 125 years ago. In India, the industry is only 15 years old. So first, there is the time gap. Secondly, given the pace at which we are growing, India is fast becoming a huge grosser for us. Our rate of growth in this market has been phenomenal. In 2009, Avon’s India revenues grew at 46%. In 2010, we grew 56%. And as we speak, this year already, the growth has been 55% y-o-y. And our plan for the next 5 years is that we should grow at a CAGR of 60%. I don’t think any company in our business in India can even talk about such figures. So yes, India is very important for Avon.

B&E: So would India be a market more important than China?
HS: No. India and China, from the point of view of the population and the rate of growth, are both right up there amongst the two most important markets in the APAC region.

B&E: Jewellery is something that you added much later in your portfolio, globally. Did that call for any change in approach to your sales strategy?
HS: Whether it be skincare or colours or jewelry, they all fall in the same superset called beauty products. So the introduction of the jewellery range did not influence our sales strategy really. As far as India is concerned, jewellery is naturally a huge opportunity. It is a $13 billion market. Of that $10 billion is real jewelry, and the rest is all about gold & silver-plated jewellery, which is what we do. At present, this fast growing segment contributes to 17% of our sales, while colours (& cosmetics) and skincare contribute to 40% and 15% respectively. So that gives a good perspective of how fast we have grown in the jewellery segment.

B&E: Let’s talk about outsourcing. You currently have close to 1000 products in your portfolio. There must be a huge chunk of that being obtained through outsourcing of the manufacturing function. Right?
HS: Most of our products are made in-house. But that does not mean that in every country where we are present, we have a factory. In India, we have a plant in Dehradun, which has a multi-product manufacturing capability with a limit up to 50 million units a year. But having said that, we do outsource as well. In fact, for many of our products, we have a global sourcing strategy in place.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

 
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Saturday, April 13, 2013

Do you trust your health insurer?

Many still do not, due to the prevailing high claim rejection rates in the industry. For a greater benefit, it’s high time insurers wake up to the fact and overcome the shortcomings present in their own processes.

When a medical insurance policyholder (the insured) enters into a contract with an insurer, it is primarily with an anticipation that eventually when the moment of truth (settlement of claims) comes, s/he would not be constrained by any problem; at least, not regarding the medical bills. This, in simple terms, explains the very concept of Uberrimae fidei or utmost good faith – the guiding principle of the contracts in insurance. But does this really happen?

Well, consider the following cases. Laxmi Subramanyam (based out of Mumbai) had carcinoma of her left breast; she got treated. She and her husband took a Mediclaim policy with New India Assurance. The policy excluded carcinoma of left breast, because it was pre-existing. Later, she was diagnosed with carcinoma of the right breast, which was not a recurrence according to the doctors but a new case. Despite that, when Subramnyam submitted her claim of Rs.80,000 to the Third Party Administrator (TPA) of New India Assurance Co. Ltd. (Raksha TPA Private Ltd.), they rejected the claim on the grounds that this was not included in the policy. Finally, Subramanyam had to take the help of a consumer forum to contest the claim.

Reshma Trivedi (Ahmedabad) had taken a Mediclaim policy of United India Insurance Company (UIIC). She had undergone a hernia operation for the second time, for which she filed a claim of Rs.27,500. But the insurer rejected the claim reasoning that Reshma had undergone caesarean hysterectomy, due to which she suffered from hernia for the first time, and subsequently for the second time too. The hernia, for which she was operated, apparently was existing while she took the Mediclaim and she had not specified the information under the pre-existing clause. However, hearing Reshma’s petition, the Consumer Disputes Redressal Forum, Ahmedabad (Rural), contended that the occurrence of hernia had no relation with her caesarean hysterectomy. The forum ordered the company to pay her Rs.30,000 towards her policy with 9% compound interest from the date of the complaint till realisation and Rs.5,000 towards cost.

Interestingly, these names are real, and so are the cases mentioned. Such cases are not rare occurrences and happen by the hundreds. There is no doubt that India – where barely 5% of the population have some sort of medical insurance, and where 80% of all health expenditure is from personal sources – offers huge potential to the providers of health insurance and allows them to grow at a mind boggling rate of 21% per annum (from Rs.66.25 billion in 2008-09 to Rs.80 billion 2009-10 in terms of premium collected). But keeping pace with the growth, cases of claim rejection and repudiation are also increasing causing higher grievances. As the IRDA annual report for 2009-10 reveals, while there were 4,525 grievances reported in FY 2009-10 (both life and non-life), the number of cases witnessed in Q1 FY2010-11 was 1,600. And going by settlement of claims, the most important factor for customer satisfaction, well, it’s a despicable sorrow state of affairs. While the best, LIC, is pegged at 96.54%, the same for the best private player, HDFC Standard Life, is only 91.14%. The situation for insurers like Canara HSBC and Future Generali, is as pathetic as possible, with only 38.71% and 38.85% of claims being settled respectively.
 

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
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Friday, April 12, 2013

Getting Back, Getting Even

From a Time when they were Playing for Survival Against MNCS, a select few Indian FMCG firms are Quickly Turning The Tables. Still, The Head-to-Head Score goes in Favour of MNCs

Even though some Indian FMCG players like Godrej and Dabur have a legacy of more than 100 years, yet they have traditionally been players with modest ambitions till the 1980s. But like other industries, the big churn came in post-liberalisation era. Over time, and especially post liberalisation, foreign players like Nestle, HUL, P&G and Reckitt Benckiser significantly grew in size and stature in the Indian market, and left the Indian firms behind by miles.

The domestic FMCG majors had to desperately play the survival game. Local companies like Dabur, Marico, Emami, Himalaya, Amul, understood that the market was changing and that they had to change with it. They shed their regional ambitions and started investing into distribution, packaging, product innovation & marketing. Players like Godrej went for a complete brand repositioning, and brought in a more professional management structure that emphasised on youth and looked to go global. But to what extent has their radical transformation helped Indian companies move up the steep learning curve that they largely stayed away from earlier? Are Indian firms taking the score back from the MNCs?

A Booz & Company and Confederation of Indian Industry (CII) report pegs the Indian FMCG industry at around Rs.1.3 trillion. The sector witnessed a CAGR of about 11% from 2001 to 2010. The last five years have shown a CAGR of approximately 17%. If the industry could continue to grow with a CAGR of 12-17%, it will become a Rs.4-6 trillion industry by 2020.

The real inflexion point for Indian players was 2001. According to the report, large Indian players grew sales by 12% from 2001-2005 and by 19% from 2006-2010. MNCs, in turn, saw sales growth of just around 2% in 2001-2005 before recovering to see growth of around 16% from 2006-2010. This has reflected in key market share gains as well. Godrej No. 1 is the leading soap brand in Northern India and third largest overall. Wipro’s Santoor holds sway in South India; ahead of the likes of Lux, Lifebuoy or Dove. ITC (well, if you were to consider it an ‘Indian’ company) is giving sleepless nights to HUL with innovations in personal care and food categories. The USP of Indian FMCGs – natural and herbal-based products – is attracting Indian customers, for whom ‘foreign’ ostensibly doesn’t carry the same attraction as before. In fact, differentiated products like Chyawanprash, Navaratna oil and Parachute have been immensely beneficial, as MNCs have consciously not invested in these products.

Consider the situation in personal care and home categories. According to Euromonitor International, Indian companies have been either holding steady or steadily gaining market share since 2005 in these segments. Even as Hindustan Unilever’s market share dropped marginally from 36.6% in 2005 to 33.3% in 2010 in the personal care segment, Dabur marginally upped its market share from 4.7% to 4.9%; while Godrej raising its share to 4.5% from 3.9%. ITC has doubled its market share to 1.4% in 2010 from 0.7% in 2008. But other international players have been gaining ground as well. Colgate-Palmolive’s market share rose from 6.4% in 2005 to 6.8% in 2010. P&G India’s share has also risen from 4.2% to around 5.4%. In these rapidly growing segments, MNCs have a clear edge over Indian players.
 

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
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Monday, April 8, 2013

B&E This Fortnight

INTERNATIONAL
BUSINESS, ECONOMY & FINANCE
Rip steve jobs

The legendary co-founder and Chairman of technology giant Apple Inc. passed away on October 5, in what will probably be remembered as one of the saddest days in corporate history. Jobs resigned as the CEO of Apple on August 24, 2011. The iPhone 4S was launched just a day before he died. Jobs will perhaps be the only business leader whose management style will never be emulated by others. During the early 1980s, the media presented Jobs as a maverick hero. And then the fateful day came in 1985, when Steve Jobs was forced to step down from his own company. Fortune did a cover story “The fall of Steve Jobs”. Any ordinary mortal would have resigned to his fate but Jobs instead went to William Hewlett and David Packard (founders of HP and Jobs’ mentors) and apologised for ending up so badly. But he was quick to rebound and shake off the adversity. What caught his fancy was the the potential that he saw in the Graphical User Interface (GUI) developed by Xerox. Whether by inspiration or imitation, Jobs decided to build computers with a rich graphic interface. Despite revolutionising the technology consumption pattern of an entire generation, his role as a technologist is largely underrated due to his obsessive focus on design. The speech that he gave at a Stanford convocation in 2005 was viewed online a record 8 million times the day he died. Jobs has truly been one of the most inspiring business leaders of our age.

Two tech titans in a court battle
The war between Google and Oracle over copyright infringement will come up for trial before a district court in San Francisco. Oracle sued Google last year, claiming the Web search leader’s Android mobile operating technology infringes Oracle’s Java patents and for which it claimed as much as $2.6 billion in damages. Oracle acquired the Java programing language through its purchase of Sun Microsystems in 2010. District Judge William Alsup had earlier asked Oracle to reconsider its damages claim and had suggested an alternative sum of about $100 million. On its part Google had moved a motion before the judge seeking to resolve the copyright claims in its favor before trial, which was also denied. After the initial hearings in the court where both parties presented their cases, the trial is set to commence this month. Many would be watching to see how the court drama will play out.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles


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Thursday, April 4, 2013

“Bureaucracy is a huge Operational Hassle in India”

It was almost 12 years ago when Mark Wilson joined Siemens. And since then he has held various positions in finance and management within The Organisation. In 2002, he was appointed Managing Director of Fujitsu Siemens Computers in South Africa. In April 2007, he was made the Senior Vice President of the Middle East Africa and India Region. In an exclusive interview with B&E, Wilson throws light on the company’s growth trajectory.

B&E: What was it that motivated you to begin your career in the IT sector? Was the environment in South Africa conducive to this sector?
Mark Wilson (MW): It’s been more than 18 years since I took up the job, and as far as I can recollect the developments in information technology domain in South Africa motivated me to take up a job in this sector. It all began 20 years back when in college I was deciding on the right career path to tread on. The IT space then was at its budding stage and looked promising. Siemens, a technology innovator with a great track record had just set foot on the South African soil. I thought it was a good opportunity, knocked at the door and was lucky enough to bag a job with them that offered me a very good profile in the administrative department at one of their start-ups. So that’s where I started, and since then there has been no looking back. After my first promotion, I was made the management in-charge and was required to head the Service Division. Later, I was given a key position as the Financial Director at Siemens’ Service Division. My journey in this organisation has been a great learning experience.

B&E: As you venture into an alliance with Siemens Enterprise Communications (SEC) to offer integrated service in the IT and communication space, what leverage do you think customers in India will get from this association?
MW: Recognising the increasing convergence between telecommunications and IT, Fujitsu India is partnering with Siemens Enterprise Communications to ensure that our Indian customers can benefit from the best of German-Japanese IT platforms and communication capabilities. Together, we expect to redefine innovations and raise the bar in terms of customer offerings. We are certain that this relationship will broaden our scope, increase market share, and strengthen core areas of customer responsiveness.

B&E: What is the scope of these integrated communication services that you, along with SEC, are offering in India?
MW: In India, there is a growing market for unified communications. The services we offer are intelligent solutions to make life easy at the enterprise as well as personal level. For example, if you want to make a conference call and you are not sure of the ones available at that moment through online/voice/video/etc, the comprehensive software will determine who all are available and on what platform, thereby enabling a hassle free conference call experience. Similarly, if you are a celebrity and want to decide what calls you want to take and when, our IT-Communication integration service does that for you too.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles

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Monday, April 1, 2013

B&E Indicators

India adds 11.1 GSM users in April

Though the total GSM subscriber base in India touched 580.7 million in April 2011, the net subscriber addition, at 11.1 million, was the lowest in the last one year. Subscriber addition, at 2.5 million, stood highest in Idea taking its total subscriber base to 92 million. Idea was followed by Bharti & Vodafone, which added 2.4 million subscribers each, taking their total subscriber base to 164.6 million & 137 million, respectively.

Broad-based weakness

While Idea managed to grow its market share in total GSM subscriber slightly to 15.8% in April 2011 from 15.7% in March 2011, Bharti’s market share declined to 28.3% from 28.5% in March 2011 due to soft net subscriber additions. BSNL too lost its market share to new players (particularly Uninor) to 15% from 15.2% in March 2011. However, Vodafone sustained its market share at 23.6%.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist). For More IIPM Info, Visit below mentioned IIPM articles
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